Filed under: Consumer experience, World wide web, Competitive strategy, Microsoft (MSFT), Apple Inc (AAPL), Amazon.com (AMZN), Sony Corp ADR (SNE)
Napster (NASDAQ: NAPS) — the mother of all file-sharing services that in 10 years’ time has found itself one among many digital-music services struggling for its very survival — is hoping its new move will attract more users. Today, Napster CEO Chris Gorog stated the company is shifting to MP3 downloads free of digital-rights-management software [subscription required], or DRM.
The move is expected to occur sometime in the second quarter, but Napster has yet to finalize the arrangements with some of the four major music companies - Sony Corp. (NYSE: SNE), Warner Music Group, EMI Group and Vivendi SA’s Universal Music Group. The final three on this list recently began selling MP3s on the download service available through Amazon.com (NASDAQ: AMZN). Sony has yet to report plans to sell its tracks as MP3s, but is reportedly expected to come forward soon.
The main value of MP3s is that they can easily be burned to CD format and can also be played on nearly any digital music player, including Apple’s (NASDAQ: AAPL) iPod. Previously, tracks acquired at Napster were only able to be played on devices using Microsoft’s (NASDAQ: MSFT) Windows Media platform. The new format would also enable file sharing, according to today’s feature in The Wall Street Journal.
The article notes that Gorog hopes this move to basic MP3s will “boost [Napster’s] download business, but … said the more massive significant is the promise ‘to break down the dominance of the closed iPod-iTunes system.’” Napster is certainly not the first, and it won’t be the last, company to try to chip away at Apple’s amazing market dominance. Others have failed, but Napster’s familiar name could give it a modest edge.
Beth Gaston Moon is an analyst at Schaeffer’s Investment Research.
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